American Apparel says it is committed to making clothes in the U.S. even after ousting longtime Chief Executive Dov Charney, who championed local manufacturing.
John Luttrell, the company’s newly appointed interim CEO, said he and the board were both firmly behind the Los Angeles retailer’s dedication to domestic production.
“We have a mutual commitment to maintaining this as a made-in-America, downtown L.A. product," Luttrell told The Times on Thursday. “There will be no wavering or changing in that commitment.”
He said local manufacturing is integral to American Apparel’s brand. The company's seven-story downtown Los Angeles factory, housed in a former Southern Pacific Railway freight depot, is the largest garment-making facility in the U.S. and employs thousands of seamstresses and other laborers, according to an industry group.
“It would be very detrimental to the brand to shift manufacturing overseas,” Luttrell said. “It’s not in active consideration and it won’t be.”
Along with his new job as interim CEO, Luttrell will also continue working as chief financial officer, a job he has held since 2011.
It remains to be seen whether the company's stance will quiet frenzied speculation among industry watchers that the retailer will have to implement drastic changes to turn around its fortunes, including a shift away from its domestic manufacturing strategy.
In a Securities and Exchange Commission filing Thursday, American Apparel warned the board's move to terminate Charney may pitch the company into bankruptcy by triggering defaults on outstanding loans.
A default "could cause us to become bankrupt or insolvent," the retailer told the SEC.
Even without a default, the company is struggling to boost sales after years of poor performance. This year, American Apparel has fought to retain its listing on the New York Stock Exchange while buried in negotiations over financing -- efforts that the retailer said would force it to file its annual report late.
The board decided Wednesday, after the company's annual meeting, to replace Charney as chairman and terminate him as chief executive. The vote immediately suspended Charney, but under the terms of his employment, a 30-day period is required before termination.
American Apparel said the action "grew out of an ongoing investigation into alleged misconduct." A source familiar with the matter said Charney's alleged problems appeared not to be criminal in nature, but involved his conduct with women and poor judgment.
Charney has long been dogged by both lawsuits and accusations of sexual misconduct and inappropriate behavior with employees. He also was a vocal public champion for immigrants and fair wages.
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